Waterborne Foreign Trade Statistics – Third Quarter of 2015

By Bridget McGee

U.S. Trade OverviewWaterborne trade for both the U.S. and Houston has stayed relatively stable through the end of the third quarter, the most recent trade data available. From July to September, crude oil prices continued to fall dramatically, declining about 20% during that single quarter. At the national level, waterborne crude imports have fallen around 50% by value year-to-date September 2015, from $133.5 billion to $64.8 billion. Car and passenger vehicle imports continue to outrank crude oil based on import value; however, based on tonnage, crude oil beats cars by a very large margin. China continues to be the U.S.’s largest waterborne trading partner, even with its slowing economic growth. Through September, the U.S. exchanged almost $280 billion in goods with China, a 4% increase from last September. As far as imports are concerned, it is too early to see any increase in consumer purchases for the coming holiday season. Although the peak shipping season started in July last year, a report from JOC indicated that shippers expected it to be pushed back several months this year.

Texas PortsAlmost all the deep draft ports of Texas have seen trade decreases, mostly likely due to continually falling oil prices. However, because the Port of Houston imports and exports a greater diversity of cargos than the other Texas ports, it has not been hit nearly as hard. Year to date, Houston saw a 15% decrease in trade; in the next largest Texas port by tonnage, Port Arthur, trade fell by nearly 50%. Part of Houston’s resiliency may be due to diversion cargo. The Port of Los Angeles, the largest port by value in the U.S., had many traffic and labor problems earlier in the year, which led to some goods coming into Houston rather than LA. While some of the cargos have since returned to LA, part of the diversion cargo has persisted and may become a permanent fixture in Houston’s trade.

Houston Exports

Total Houston exports have continued to decline in value, down year-to-date by 14.5%. However, the total tonnage Houston exported increased by 10.7%. Crude oil exports fared especially well, increasing by 48.7% in value and by 180.2% in tonnage. Almost all crude oil went to our neighbor in the north, Canada, and a small amount shipped to the Netherlands. The only commodity that has fallen as far as tonnage is concerned is heavy machinery parts, which fell by 32.9% September year-to-date.

Houston Imports

Much of Houston’s imports remained consistent between the second and third quarter. Crude oil is still at the top, with 20.6 million metric tons. The import of cars and other passenger vehicles increased year to date by about 2%; however, the future import growth of that commodity is uncertain. The Port of Houston is one of Volkswagen’s U.S. import and storage ports, and whether or not the models moving through Houston are impacted by the recall is not published information. This, combined with the timing of the available trade data, which ends shortly after Volkswagen’s announcement to halt affected model sales, means that the impacts on Houston are not yet understood.

The aforementioned supply chain bottleneck in LA shifted some new and lesser-seen cargos to Houston’s portfolio. This shift is perhaps most shockingly seen in the odiferous/aromatic mixtures for foods and beverages commodity category. Essentially, these are mixtures added in food or drink manufacturing which provide a flavor or a pleasant smell; some examples are vanilla, orange, or cherry. According to the September U.S. trade data, Los Angeles imported 1,383 metric tons less of aromatic mixtures, while Houston imported 1,315 metric tons more of the same commodity. These mixtures have a high dollar-per-ton value, so the increased cargo brought Houston’s total aromatic mixtures imports to $433.7 million, among the Port of Houston’s top ten commodities by value. Many of the other items that similarly moved from Los Angeles to Houston were foods, such as chilled or frozen pork, rice, and wine.

Houston’s Trade PartnersBy the end of September, Houston was still operating at a trade surplus of about $12.2 billion, even though the U.S. had a deficit of about $414.3 billion. However, even with a surplus that almost doubled from June to September, Houston trade is down by 15.4% by value compared to the same period last year. For this quarter, Mexico surpassed China as Houston’s top trade partner by about $189 million and about 14 million metric tons. This is mostly likely due to China’s recent economic decreases.

Looking ForwardThe unknowns continue to be falling oil prices and China’s economy. However, even with uncertainty in China, exports to it and Asia as a whole have increased by 36% and 0.44%, respectively. While crude is essential to the world economy and is unlikely to fall out of the top ten for Houston imports anytime soon, low oil prices are still a driving force in the broader Houston economy. The Texas Workforce Commission reported 4,000 lost energy jobs September year-to-date, and as of the November Economy at a Glance update, the Greater Houston Partnership believes that number will be revised even lower. A key new factor to consider is the strength of Volkswagen’s imports through the end of the year, which will hinge on its ability to remedy the emissions issues and regain customer trust. Another, potentially positive, unknown is whether Houston will be able to hold on to the extra imports diverted from Los Angeles. When comparing containerized vessel values and tonnage, Los Angeles fell by about 7.9% and 3.3%, while Houston increased 5.5% and 7.4%, respectively. Maintaining those gains would be very beneficial for the future of the Port of Houston.